The Bank of Uganda (BoU) has reduced the Central Bank Rate (CBR) by 1 percentage point to 10 percent in June 2017. The band on the CBR has been maintained at +/-3 percentage points and the margin on the rediscount rate at 4 percentage points on the CBR.
The Governor at a press conference held on Monday, June 19 2017 , announced a further reduction of the Central Bank Rate (CBR) by 1 percentage point from 11 percent to 10 percent. The rationale for further easing of monetary policy is based on; the forecast that inflation will stabilize around the target of 5 percent within 12 months, and to support economic growth.
Below are the salient features that stand out in today’s Monetary Policy Statement:
There was an increase in both headline and core inflation, with the former increasing to 7.2 percent in May 2017 from 6.8 percent in April 2017, on account of a sharp increase in food crops and higher energy prices. Core inflation only increased by 0.2% to 5.1% due to a stable exchange rate and subdued domestic demand.
Estimates show that the economy will grow by 3.9 percent in the Financial Year 2016/17, down from 4.7 percent in the Financial Year 2015/16. The slowdown is mainly due to the drought affected agricultural production, weak private sector credit growth and the slow implementation of public investment projects. Projections for Financial Year 2017/18 however, indicate that economic growth will pick up to 5.0 percent
Monetary Policy statement for June 2017